[Iclickart]
South Korea's three top life insurers were punished by financial regulators for refusing to provide overdue suicide benefits to policyholders after arguing the suicide provision was incorrectly inserted into the contract.
The Financial Supervisory Service decided Thursday to ban Samsung Life Insurance, Hanwha Life Insurance and Kyobo Life Insurance from selling particular products for up to three months along with a fine of up to a fine of up to 890 million won (777,300 US dollars).
Their executives received a warning so that they would not be allowed to serve another term.
The three insurers were accused of failing to pay out death claims for subscribers who committed suicide, a controversial social issue due to claims that their policies would encourage people to kill themselves.
The controversy over unpaid suicide benefits goes back to 2001 when an insurer stated that death benefits would be provided to policyholders even in the case of a suicide.
Other insurers followed suit, selling policies for accidents that cover disaster-caused deaths as well as suicide to cash in on a relatively high suicide rate in Asia's fourth-largest economy.
South Korea's suicide rate has been ranked highest among all OECD countries every year since 2003 when 28.1 people per 100,000 took their own lives. The rate peaked in 2009 at 33.8. According to 2014 data by Statistics Korea, suicide was the No. 1 cause of death among people aged 10 to 39.
The insurers, however, changed the terms of policies to exclude suicide because the families of policyholders who commit suicide should receive far higher payments than those for general death.
In 2014, the watchdog found out life insurance firms had refused to pay suicide benefits, arguing that suicide coverage was mistakenly included in the contract. On the watchdog's order, all insurers but Samsung Life, Hanwha Life and Kyobo Life paid out overdue suicide benefits.
Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
